Brent at $55-56, China growth slows, Saudi out­put at max

Brent Crude was trad­ing at shy of $56 on Tues­day as data from China sug­gested a slow­down in its growth, part of the “go fast, go slow” cy­cle, while oil out­put at OPEC-driver Saudi Ara­bia was still at an all-time high.

The HSBC/Markit PMI flash for China was at an 11 month low of 49.2 against a fig­ure of 50.7. The de­mar­ca­tion be­tween ex­pan­sion and con­trac­tion is 50.

The IMF re­cently fore­cast that China’s growth would slow to 6.9% next year, well off the tor­rid pace set for over a decade. Even that down­ward re­vi­sion is in trou­ble, as more signs ap­pear of crack in the Chi­nese econ­omy, ac­cord­ing to 24/7 Wall St.com.

Chi­nese man­u­fac­tur­ing may have slowed so much be­cause of trou­ble with economies in the EU and Ja­pan. The U.S. econ­omy may be large, but can­not carry China on its shoul­ders.

Brent fu­tures for May de­liv­ery were 20 cents down at $55.72 in early trad­ing, while U.S. crude dropped 31 cents to $47.14 a bar­rel, widen­ing its dis­count to Brent to $8.58 a bar­rel.

Mean­while, Saudi Ara­bia around 10 mln bpd, close to an all-time high and about 350,000 bpd above its Fe­bru­ary quota.

OPEC’s de­ci­sion to fight for mar­ket share rather than cut­ting out­put has con­trib­uted to a halv­ing in oil prices since June as the global sur­plus of oil sup­plies has grown.

The mar­ket is ex­pected to be at its weak­est in the sec­ond quar­ter as win­ter fuel de­mand wanes while peak sum­mer driv­ing ac­tiv­ity is yet to kick in, ac­cord­ing to Reuters. En­ergy con­sul­tancy FGE fore­casts a global sur­plus of 2 mln bpd be­tween April and June.

U.S. crude stocks, which al­ready stand at their high­est in at least 80 years, were fore­cast to have risen for an 11th record­break­ing week, a pre­lim­i­nary Reuters sur­vey showed.

Mean­while, in an­other re­port, Bloomberg sug­gested that with oil and nat­u­ral gas prices con­stantly fluc­tu­at­ing, the big­gest gain­ers will be stor­age com­pa­nies in the U.S., as well as the likes of Vi­tol, whose sub­sidiary VTT Vas­si­liko started op­er­at­ing in Cyprus at the end of De­cem­ber.